The cannabis industry is growing at an impressive rate as more states follow the trend of legalizing marijuana for recreational use or decriminalizing this federally controlled substance. In several states, the cannabis industry employs thousands of hardworking individuals and stimulates the local economy. While more states are expected to legalize marijuana, the vast majority of lenders are still wary about offering cannabis industry financing. This can make it difficult for employees in this line of business to achieve the milestone of homeownership, despite earning a consistent, healthy income as a W-2 employee. Despite the national regulations, finding marijuana property loans isn’t impossible: a small number of lenders will accept income derived from the cannabis industry. If you’re an owner or W-2 employee in this line of work, here’s what you’ll need to have on hand for the application process:
Two Years of Tax Returns
Cannabis industry financing functions similarly to the traditional process of obtaining a mortgage loan. The most important information that your lender needs is one to two years of tax returns. Documenting your income is a vital part of the process, and lenders will be on the lookout for consistent income that’s high enough to pay your mortgage each month. Recent pay stubs may also be required.
Bank Statements and Additional Assets
Many individuals in the cannabis industry keep large amounts of cash on hand. Lenders are unable to accept “mattress money,” so be sure to deposit the funds you plan to use as a down payment at least two full statement cycles before the lender pulls your bank statements. You’ll need to avoid making unexpected large deposits in order to qualify.
As with all loan applications, you’ll need to provide an official photo ID in order to prove that you are who you claim to be. A driver’s license or state-issued photo ID is ideal.
If you’re planning to use gift funds toward the down payment, you may need to present the lender with a gift letter from the provider. This information should state the amount of the gift, your relationship with the gifter, and their written acknowledgment that the funds are not a loan.
Regardless of where you work, you’ll need to provide your lender with the necessary documentation in order to be approved. We believe that it shouldn’t be a challenge to obtain cannabis industry financing. Homeownership is an exciting accomplishment, and individuals with steady income shouldn’t be barred from this step. If you’re a member of the cannabis industry and you’re ready to become a homeowner, our team is here to help. We’re happy to speak with you about options, so please get in touch with us when you’re ready to learn more.